Governments need to work together on housing challenges

Acknowledgements:

the Hon Zoe Bettison, the Minister for Social Housing in South Australia,

the Hon Mick de Brenni, Minister for Housing and Public Works in Queensland.

Let me begin by saying that it is a great honour to have been entrusted with responsibility at the Commonwealth level for assisting Social Services Minister Christian Porter on housing and homelessness, an area of responsibility that deals with an issue absolutely central to our lives.

We all know the importance of housing, and particularly, stable housing. Stable housing remains fundamental to both social and economic security, for the individual, for families, for the nation.

The critical role of housing is reflected in an almost $10 billion investment made by the Commonwealth, state and territory governments each year in housing assistance and homelessness services.

The Commonwealth contributes $6.8 billion through Commonwealth Rent Assistance, the National Affordable Housing Agreement, the National Rental Affordability Scheme and the National Partnership Agreement on Homelessness.

Indeed, for many years housing and homelessness outcomes have continued to decline. No doubt most of you in this room have been in this space for a long time, so you don’t need me to tell you this – but I think it’s worth reflecting on the stark reality of the challenges we face:

The rate of home ownership has been in decline since 1991 and disproportionately for younger Australians. The proportion of low income households in rental stress increased from 35.4 per cent in 2007-08 to 42.5 per cent in 2013-14.

Commonwealth Rent Assistance, at $4.5 billion this year is the biggest single expenditure item in Commonwealth housing assistance and has been increasing at a rate of seven per cent a year since 2008-09.

Meanwhile, almost 200,000 households remain on public and community housing waiting lists.

And more than 255,000 people received assistance from homelessness services in 2014-15 with more than 30 per cent of those seeking assistance to sustain their tenancy due to declining housing affordability.

Those are sobering numbers when you consider the big investment the Commonwealth and states have made in housing.

But, of course, these aren’t just statistics. These are people. People who are sleeping rough, or struggling to hold down stable housing, or needing emergency assistance.

I’d like to echo some of the words of the Minister for Social Services, Christian Porter, who spoke recently about welfare reform making the point that:

“the moral imperative here is to move away from being content with policy approaches that just spend more money because that is the way it has always been done”

Our goal in housing policy, just as in welfare policy, is to improve lives.

And we need to keep that at the forefront of our minds as today’s AHURI conference continues and we explore some of the things we can do to do just that.

All that said, the Commonwealth is taking some significant steps to address this situation and I think it is worthwhile to address where things stand at the moment.

At last year’s National Housing Conference, which I know many of you attended, Minister Porter noted that no single level of government can work alone to increase the supply of affordable and social housing.

He also noted that solutions will need to be collaborative and innovative.

The Commonwealth has taken some significant steps to promote an enhanced level of collaboration around innovative solutions and I would like to briefly update you on some of them.

The Affordable Housing Working Group

In January of this year the Commonwealth established the Affordable Housing Working Group through the Council on Federal Financial Relations with representatives from the Commonwealth, New South Wales, Victoria and Western Australia.

The Working Group was asked to look at models that attract private and institutional investment in affordable housing and to report back to Heads of Treasuries on its findings and recommended next steps.

An Issues Paper was released in February, followed by a comprehensive consultation process.

I am aware that a number of you have contributed to this process and I thank you for your ongoing interest and active participation.

Key feedback from the consultations included the need for any model to be able to achieve critical scale, provide a pipeline of investment opportunities, be a liquid investment and come with credible policy certainty from governments.

In this context, the Working Group considered a number of financing models, including: a housing bond and loan aggregator, a housing trust, housing co-operatives and impact investing models, including social impact bonds.

The Working Group will provide a final report before the end of the year.

Smart Cities Plan

Another of our initiatives is the Smart Cities Plan, led by Cities Minister Angus Taylor, that the Commonwealth released in April, again with the invitation for comment.

The Smart Cities Plan will be delivered through what we call City Deals.

City Deals introduce a new vehicle through which the Commonwealth will engage with the states and territories on regulatory and policy reform.

They will create incentives to streamline planning and development approvals, and meet long term housing supply targets.

In many cities a critical element of these Deals will be measures to address housing supply and affordability by, for example, encouraging higher density development, greater diversity of housing options, and integrated planning.

Cities, or parts of cities, will be selected through consultation with state and territory governments, prioritising areas where the opportunities are greatest.

Discussions are currently underway to progress City Deals in Western Sydney, Townsville and Launceston.

Competition Policy Reforms

The Government’s competition policy reforms are also of relevance to the housing challenge.

Two years ago, in 2014, we commissioned an independent ‘root and branch’ Competition Policy Review – the Harper Review.

This was the first major review of Australia’s competition framework since the Hilmer Review in 1993.

A key focus of Harper was to identify impediments across the economy that restrict competition and reduce productivity, which are not in the broader public interest.

Following a wide consultation process, the Government released its Response, supporting 44 recommendations in full or in part and noting a further 11.

More recently, in April this year, COAG agreed that Treasurers develop a new competition and productivity-enhancing reform agreement for consideration at their next meeting.

This will incorporate an updated set of competition principles, shared national and state-specific competition and productivity reforms, independent evaluation and assessment mechanisms and innovation payments.

We would expect housing related services to benefit from this enhanced capacity for competition and specialisation with increases in efficiency and innovation, including through planning and zoning reforms.

Compulsory Rent Deduction

Another area of reform is compulsory rent reduction or CRD.

The commitment is this year’s Budget to introduce CRD for social housing recipients follows a request from the states.

CRD will enable tenancy charges and other housing costs to be deducted from income support payments for people living in social housing. Those deductions will not cease without the agreement of the social housing provider.

We see a twofold benefit here:

One is to prevent homelessness by reducing evictions as a result of not paying rent.

The second is to better secure the income stream associated with housing assets thereby improving the attractiveness of social housing as an investment class for private sector investors.

I hope the states will continue to work closely with us to finalise the design and implement CRD.

Conclusion, and NAHA, NPAH

So, I think you’d agree that, collectively, there has been a lot of activity. But I return to my original point – which is that we need to remember to focus on improving people’s lives.

While the level of activity – and commitment – is a significant cause for optimism, it will be important that both translate into meaningful improvements for people experiencing housing stress and the risk of homelessness.

We can’t mistake activity for outcomes.

In that vein, I think we need to talk about the proverbial ‘elephant in the room’.

This is the need to improve outcomes achieved via the National Affordable Housing Agreement (NAHA).

When NAHA began in 2009, it set out a number of benchmarks for affordable housing:

These included:

From 2007/08 a 10 per cent reduction nationally in the proportion of low-income renter households in housing stress

A 7 per cent reduction nationally in the number of homeless Australians

A 10 per cent increase nationally in the proportion of indigenous households owning or purchasing a home

A 20 per cent reduction nationally in the proportion of indigenous households living in overcrowded conditions.

The Commonwealth supports the NAHA by providing states and territories with around $1.3 billion each year.

But the fact is with that investment, except for overcrowding in indigenous housing, we are not only failing to meet those benchmarks – the numbers have gone backwards

The proportion of low income renter households experiencing rental stress has, instead of reducing 10 per cent, has gone up by an astonishing 42.5 per cent.

The number of homeless persons has not been reduced by 7 per cent – it’s gone up by 17.3 per cent.

And there is no evidence to suggest any movement on the proportion of indigenous households owning or buying a home.

Without question, the NAHA has not delivered on what it was promised and we have a responsibility to remember that we’re in the business of improving lives with affordable housing so this needs to change.

At their meeting in Brisbane in March – which was hosted by Mick de Brenni – Housing and Homelessness Ministers discussed the importance of a sustainable and longer-term policy and funding approach to integrated housing and homelessness services.

Ministers recognised the imperative for all Australians to have access to safe, appropriate and affordable housing, noting again the importance of affordable housing for people on low incomes.

We need to ensure that the significant investment provided through the NAHA is directed at achieving the best possible housing outcomes for those households in housing stress or at risk of homelessness.

We also need to ensure that jurisdictions, industry, the community housing and homelessness sectors and the Commonwealth have confidence in the effectiveness and transparency of the Agreement.

In short, we need to be able to demonstrate that the money we spend under NAHA leads to more housing for more Australians.

I know that this is a complex issue that’s going to take a lot of collaboration to get right. The Treasurer, Scott Morrison, Minister Porter, Angus Taylor and myself have already begun the work in finding a way forward through comprehensive housing reform. Reforms that will incorporate innovative models of social housing to improve lives and give people the chance to find secure, stable housing.

In particular, we are also beginning to have conversations about how planning and zoning issues can be a key impediment to increasing housing supply and improving housing affordability.

To this end, I am keen to engage with states and territories, the housing sector and other key stakeholders around how we might examine current policy settings and consider options to achieve improved outcomes.

Finally, I would like to again thank you all for the enormous amount of work you have put into alleviating Australia’s issues with housing affordability and homelessness.

There is still much to do, though, and I look forward to meeting further with you and am keen to hear any suggestions you have that will lead to meaningful changes in what is a complex and challenging – but vital – policy environment.